Euro Comes Out Strong Amid US Uncertainty

The euro was strong against the dollar on Tuesday morning as markets prepared for the release of delayed US data. The US Federal government shutdown kept several key pieces of data from being released at the beginning of the month, namely nonfarm payrolls. The payrolls data is due out on Tuesday and many expect the data to show a modest improvement. However, Tuesday's data will be a picture of September's activity; which will leave markets to wonder about the scale of the damage done by US politicians' infighting over the debt ceiling until October's payrolls report is released on November 1st. Uncertainty in the US has caused the dollar to plummet and in turn, the euro to climb. The common currency has become somewhat of a safe haven with the political drama in the US keeping markets on edge. Although the US budget showdown has been resolved, most see the last minute agreement as simply kicking the can. Democrats and Republicans in Washington narrowly avoided a sovereign default by passing a temporary budget to fund the government and extending the nation's borrowing authority until early 2014. With the budget decisions merely being put off until 2014, most investors are wary of the dollar as some expect to see a repeat of October's brinkmanship. The euro has risen as an unlikely choice for investors looking for safe bets after facing worries that the currency would fall apart just months ago. Businessweekreported that the euro had the best performance in a basket of 10 developed market currencies, up 5.8 percent. By contrast, the dollar has only gained 1.7 percent according to the index. Moving forward the flood of US data is likely to get markets thinking about the possibility of a Federal Reserve taper, which most aren't expecting until 2014.